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Submission on Budget Policy Statement 06 Released

Submission on Budget Policy Statement 2006 Released

“The Business Roundtable is calling on the government to reconsider its spending programmes and tax policy, and to adopt a more pro-growth economic strategy”, the executive director of the New Zealand Business Roundtable, Roger Kerr, said today.

He was commenting on its submission on the Budget Policy Statement 2006 which was presented this morning to parliament’s Finance and Expenditure Committee.

Mr Kerr said the projections in the Budget Policy Statement for the growth of the economy in the five years to 2010 were clear evidence of a likely deterioration of economic performance, not the improvement the government was targeting. Accordingly, it should be open to a serious reconsideration of its growth strategy.

This should include its spending plans, which involved large ongoing increases in expenditure and poorly justified initiatives such as making student loans interest-free and the Working for Families package.

Government spending was taking a bigger bite out of the economy, putting pressure on the real exchange rate and internationally competing industries, and keeping taxes unnecessarily high.

Ever-increasing regulations were adding to problems of international competitiveness.

Mr Kerr said that the government’s review of business taxation was welcome but it should be undertaken speedily to improve incentives for investment and growth. There was no need for a protracted exercise given the comprehensive review of the tax system in 2001. The McLeod report’s key recommendation, the adoption of a lower and flatter income tax structure, with an alignment of the top personal and company tax rates, was supported by the Business Roundtable.

The Business Roundtable also favoured a better constitutional framework for fiscal and regulatory policies and advocated the inclusion of a Tax and Expenditure Limitation rule in the Public Finance Act and the adoption of a Regulatory Responsibility Act.

“Other business organisations have made similar submissions on this year’s Budget Policy Statement”, Mr Kerr said. “The government has said it wishes to have a better rapport with business, and we hope a more meaningful dialogue around fiscal strategy and growth issues will be initiated.”

15 February 2006

ENDS

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